Chevron Forecasts Little Output Growth After Profit Declines

Chevron Corp., the third-largest oil company by market value, said production this year will rise less than 1 percent as fourth-quarter profit tumbled 32 percent amid slumping prices.

Crude and natural gas output will average the equivalent of 2.61 million barrels a day this year, a 0.5 percent increase from 2013, the San Ramon, California-based company said in a slide presentation today. For the final three months of last year, net income dropped to $4.93 billion, or $2.57 a share, from $7.25 billion, or $3.70, a year earlier, Chevron said in a separate statement.

Costs have ballooned at Chevron’s flagship $54 billion Gorgon liquefied natural gas development in Australia, which is almost 75 percent complete, as the company looks to deep fields in Kazakhstan and the Gulf of Mexico to add supplies. Chevron is the latest major international energy producer to disclose production shortfalls while facing surging costs and unplanned project delays.

“Production growth is going to be modest this year,” said Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston. “In the absence of large project startups, production growth beyond the very low single digits is just not realistic.”

Worst Performing

Chevron slid 4.1 percent, the most since October 2012, to $111.63 at the close in New York. It was the day’s worst-performing energy producer in the Standard & Poor’s 500 Index.

Both Exxon Mobil Corp. and Royal Dutch Shell Plc, the top two oil companies by market value, reported lower quarterly earnings this week compared with 2012. Chevron’s stock underperformed Exxon and ConocoPhillips last year and lagged the industry average.

Brent crude, the global benchmark oil price, averaged $109.35 a barrel in the last three months of 2013, a 78-cent drop from the prior fourth quarter.

“Global crude oil prices and refining margins were generally lower in 2013 than 2012,” Chairman and Chief Executive Officer John Watson said in today’s statement. “These conditions, as well as lower gains on asset sales and higher expenses, resulted in lower earnings.”

Per-share results at Chevron matched the average estimate of 18 analysts. Sales fell 7.3 percent to $56.2 billion.

Chevron said its fourth-quarter production fell 3.4 percent to an average of 2.58 million barrels of oil equivalent a day in the quarter, from 2.67 million barrels a year earlier. Earnings from oil and gas sales dropped 29 percent to $4.85 billion.

Watson has said he plans to spend $39.8 billion this year on gas-export facilities, offshore crude platforms and exploratory drilling as part of a plan to increase global production 20 percent by the end of 2017.